In the last year, the Central Bank of Bosnia and Herzegovina (CBBH) increased the participation of monetary gold in the total portfolio of foreign exchange reserves by purchasing additional amounts of gold.
The participation of monetary gold, according to the data at the end of February this year, is about 3.5 percent in the total foreign currency reserves of the CBBH.
– That quantity is the largest amount of monetary gold that the CBBH has ever owned from the founding. At the level of the participation of monetary gold in total foreign exchange reserves, the market value of gold that is a changing category, but also the overall level of foreign exchange reserves that changes daily depending on the demand for the domestic currency – the Fenni from the CBBH.
The CBBH due to legal restrictions, as they added, has a limited number of instruments in which it can invest their foreign exchange reserves and is estimated that gold and with relatively small participation contributes to dive. Gold, as assets that are preferred to protect against geopolitical and financial risks, has a positive contribution to portfolio diversification, which aims to protect against financial risks, as well as for protection from credit risk.
The amount of gold that the CBBH can hold in its portfolio is determined in accordance with the legal framework, as well as a strategic commitment. According to the strategic commitment of the CBIH, which is based on the level of market risk, which the central bank currency board may take over, in 2024. It is estimated that there is space for increasing the participation of the Monetary Gold in the CBBH foreign exchange reservation portfolio. In accordance with the above, the CBBH purchased an additional amount of gold.
– The price of gold, with occasional short-term corrections, records a growth trend. As gold is perceived as secure assets for insurance against geopolitical and economic instability, due to concerns about trade tensions and potential global recessions, investors are increasingly investing in the same price – stand out from the Central Bank of BiH.
They emphasize that the CBBH carefully monitors the movements in financial markets and will, as so, all future decisions are based on the legally prescribed restrictions, as well as all other relevant factors.
Professor at the Faculty of Economics at Sarajevo Adnan Rovčanin says that gold is one of (the most) safer forms of investment, especially in the conditions of risk and uncertainty, which are currently in the world, transmitted by Hairdryer.
– This is one of the key reasons to in the conditions of accentuated risk and uncertainty, the investors “escape into gold”. Therefore, the demand for gold has grown significantly, so the price of gold has reached historical maximum – stated by the Rovcanin.
In general, as he added, investment in gold is worth it, and this is also shown by the historical trend of growth prices of gold, with oscillations caused by world economic, political and other movements.
– Nevertheless, investing in gold depends on the attitudes and expectations of the investor. Does the investor prefers to minimize risk, or maximizing investment yields. These are two basic criteria of the portfolio selection. The first criterion – minimizing risk, goes in favor of investing in gold, as a safe investment. The second criterion, more goes in favor of other forms of investment that bring, except for capital profit (yield based on price) and return on the fee for the invested funds (dividend, interest, profit) – said Rovčanin.
The expert team of the Central Bank of BiH led by Governor Jasmina Selimović, according to him, was certainly used by relevant information on the basis of which it made a detailed analysis of the existing state, as well as assessments of the world’s future trends, which are crucial for gold prices.
– Therefore, I am sure that the decisions of the CBBH are optimal and rational. It is an “active approach” of the Central Bank portfolio management – a repalation of the portfolio in accordance with market and other changes – Rovčanin added.
He noted that there is nothing “reliable” when it comes to investments and that they are always accompanied by greater or lower risk. In the definition of the investment: “… we are investing today with the aim of achieving yields in the future …”, it is also contained. The future always implies uncertainty and risk inevitably.
– When it would be different and if we could predict the expected returns (results of our investments with complete certificate, then we would all be billionaires “overnight”. What maybe it wouldn’t be bad?! However, investments should be distinguished from speculation, which involve short-term investments with expected earnings based on the price difference. What makes the investment especially complex, including investment in gold, are overall: economic, political, social, and even climate and other changes. These, as well as many other factors, determine the justification of investment in gold. Therefore, as far as we can for reliably predict these systems (unavoidable) risks, the results of our investments will depend – said Rovčanin.
The price of gold increased on Friday Further 0.6 percent, on a record $ 3,073 for ounce. Due to the uncertainty in financial markets, the price of gold increased from the beginning of the year more than 17 percent, so in the path to the largest quarter jump since 1986. years.
